Tuesday, September 22, 2009
German Chancellor shrugs off GM deal criticism
German Chancellor Angela Merkel has defended her government's financial support for General Motors' European division, while UK Business Secretary Lord Mandelson has called on the European Commission to ensure that a 'subsidy war' does not break out with countries using state aid to protect jobs.
Lord Mandelson has already warned of a 'political fix' following General Motors' decision to sell a 55 per cent stake in its European operations to a consortium led by Magna International - a move that has been financially backed by the German government.
But, Ms Merkel defended the move at the Frankfurt Motor Show where she said that Opel and Vauxhall would have struggled to survive without Germany's help.
"We thought it was important to give this company another chance. We are naturally determined to resolve the remaining problems in a spirit of European equality.
"If we had not intervened with a bridging loan when General Motors declared bankruptcy, many Europeans would have been in trouble. It was mutually beneficial."
The European Commission has said that it will analyse Germany's actions following complaints from other European countries. The German government provided a €1.5 billion bridging loan and is set to back the Magna deal with €4.5bn of further support.
Ms Merkel is facing a general election in Germany later this month and securing 25,000 jobs at GM Europe plants in the country would be a major boost to her campaign.
Meanwhile, Lord Mandelson's comments underline his concerns that Vauxhall jobs at factories in Ellesmere Port and Luton could be sacrificed to save German jobs.
Lord Mandelson said the European Commission should 'refuse to accept plant closures and restructuring that reflect the size of the chequebook, rather than commercial considerations'.
He says he wants to work with Magna but will fight to prevent any jobs-for-cash deal that allocates Magna's intended 10,500 Europe-wide job cuts on the basis of state aid, rather than commercial viability.
The UK government is due to meet Magna officials in London this week.
DATED: 22.09.09
FEED: AW
